How Does Forensic Accounting Differ from Regular Accounting?

0
201

People who get into accounting usually love numbers and have excellent organization skills. But being an accountant doesn’t mean that you have to get a job as a tax preparer or within the financial department of a large department. There are different accounting specialties perfect for people with a range of skills and interests, including forensic accounting.

What Is Forensic Accounting?

Lots of people are interested in crime stories, but catching criminals doesn’t always involve car chases or crime scene investigations. Many high-profile cases involve investigators who operate behind the scenes to uncover evidence of criminal activity.

Financial crimes are extremely common and cost the economy (and individuals) massive amounts of money each year. Forensic accountants are tasked with combing through financial records in search of fraudulent activity. While government agencies and police departments may turn to forensic accountants to investigate crimes, private companies (such as insurance companies or accounting firms) sometimes hire them as well, to investigate potential fraud and embezzlement as needed.

Forensic accountants can earn an extremely competitive salary for their investigative and auditing skills. The median salary is upwards of $100,000, making this both a fulfilling and well-paid career.

Accounting vs. Forensic Accounting

Accountants are responsible for not only keeping financial records but also analyzing them. Many work in the field of tax preparation, but accountants can hold a wide variety of financial roles. Although they can work as bookkeepers, bookkeepers need less education and cannot hold accounting jobs. Most accountants help to ensure that the books are correct and find opportunities for individuals and organizations to manage their money more efficiently.

Forensic accountants, on the other hand, must follow the money and use investigative techniques that will be appropriate for a court of law. Usually, money has gone missing under suspicious circumstances and it’s up to forensic accountants to trace the money and how it might have disappeared. This is not only key for determining who is responsible for committing fraud, but also for recovering the missing money and preventing future fraud, if possible.

Forensic Accounting Job Functions & Career Growth

Forensic accountants use their skills in analyzing or auditing financial records to look for anything suspicious. Depending on the skill of the criminals in covering up their trail, forensic accountants may have to check into many different documents, organizations, and banks to uncover any criminal behavior hidden in the books.

“White-collar” crime (financially motivated and non-violent) is the most common type of crime a forensic accountant will investigate. However, financial records may be important in other types of investigations, if there is a financial component or motivation to the crime.

A forensic accountant may be called upon to testify in the courtroom if their findings prove to be important to a prosecutor’s case. Like all accountants, a forensic accountant must be able to explain their findings to people who might not be familiar with financial terms and standards.

The career outlook is good for forensic accountants. In the digital age, new opportunities for white-collar criminals have emerged, leading to demand for these specialized investigative skills.

Cybersecurity Losses: Forensic Accountants & Data Breaches

Cybercrime is a huge problem these days, costing the economy billions of dollars. While forensic accountants don’t have the skills to prevent data breaches, they can help cybercrime experts to investigate the cost of a cyberattack.

Individual data breaches cost organizations millions of dollars in losses, encompassing lost revenue, reputation damage, and more. Forensic accountants can help sort out exactly how much breaches are costing organizations for the purposes of class-action lawsuits and insurance claims. These valuations are necessary and require specialized knowledge.

Education Requirements & Top Career Paths

Forensic accounting can be an extremely satisfying career, but it is also challenging and requires advanced accounting, auditing, and investigative skills. To get a job in the field, a bachelor’s or master’s degree in a related field is a must. Good choices include forensic accounting, accounting, or finance.

It’s a great time to get into the field as cybercrime has increased demand for people who can perform investigations, audits, and valuations. Those with good attention to detail, the ability to spot inconsistencies, and enthusiasm for solving crimes. For the right person, forensic accounting can be an exciting and lucrative career path!

LEAVE A REPLY

Please enter your comment!
Please enter your name here